tv Nightly Business Report PBS November 23, 2009 7:00pm-7:30pm EST
>> paul: for pc maker hewlett- packard it's all about services. profits jump 14% as its services business picks up. coming up, a look at the trends behind hp's numbers. >> susie: on the surface, good news about home sales. but behind october's 10% sales jump bloated inventories and soft prices. we look at the disconnect. >> paul: meet dan, he's an asian business specialist. if you never heard of that type of job, you will a look at the growing career path, as we kick off our series "careers for the next decade." >> susie: then, with unemployment rising, the nation's food pantries are being stretched like never before. we look at one of them in chicago and check what it's doing to cope. >> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is nightly business report for monday, november 23
thank you. captioning sponsored by wpbt >> susie: good evening, everyone. higher profits, lower revenues, that's what hewlett packard said after the bell today about its latest quarterly results. the pc-maker confirmed the numbers it pre-announced last week: excluding items, profits rose 14% to $1.14 a share, but revenues fell 8% to about $31- billion. what does all this mean for h.p. and the tech sector. standing by with some answers, our tech expert, scott gurvey. >> reporter: susie, the big take-away here is that hp's increase in profits comes mainly from cost cutting. profits were down in the hardware sectors, that's pc's and laptops and such and up slightly for printers. where the company did best is in the newer areas of software and services. last year, hp bought eds, giving it a big stake in the services sector.
and just this month it bought 3com, giving it more ammunition in networking. i talked today with analyst tom smith of standard and poor's who credits the eds acquisition for hp's improved results. >> hp's acquisition of eds brings a substantially larger service operation to the over all deal. this gives you steadier earnings, longer term contracts and helps you offer more of a one stop shopping solution to combine the hardware software and the services to set it up and to maximize your ability to use the equipment to the best effect. >> reporter: it was actually ibm which began this shift toward one-stop shopping. big blue grew its own services business to add to its hardware and software products. dell has also been trying to diversify. it recently acquired perot systems, another services company, although one much smaller than eds. but it is still struggling with this new business model.
>> so tell me a little bit more about dell. how does dell fit into this whole picture, scott. >> it's >> reporter: that's a good question because it hits on another of dell's problems. there's a lot of competition out there, acer and asus, toshiba, even sony are all making pc's aimed at various segments of the market. is this growth specific to hp or industry wide. with one thing if the ceo of house speaker newt gingrich said today that looking ahead he is seeing more business in asia, it is very strong there, that the u.s. is turning the corner. europe is flat but it is stable. is this a specific to hp's future growth or is this something, are you seeing an uptick in technology across-the-board? >> well, you know we've heard lately from tech leaders and ceos at intel and cisco, they both told us they have been seeing similar strength. so that with fingers crossed, there is some cautious optimism out there, that this is a worldwide
phenomenon. >> and is it still going to be more in the services side of the business rather than the hardware side qpkafter three straight sessions s that the case? is this how you see it going? >> yes and no. certainly services is where the growth is, that is there is no question about that. when you make comparisons. however, we do have the situation where companies because of the economic conditions have put off purchasing hardware for quite a long time. and so that's what cisco is seeing, that is what intel is seeing. there is this refresh cycle, as they say, in which people are expecting there to be at least here a group of pcs and routers and things like that purchased as people begin to upgrade their equipment. >> we'll see where all that goes. thank you so much, scott, for the update. >> thanks, susie. new york bureau chief, scott gurvey reporting. >> the october existing home sales jump 10%, restoring
investors confidence in the economic recovery. incidentally, we'll have more on today's housing report in a moment. by 11:00 a.m. the dow had surged 154 points, nasdaq up 54 -- 57. light trading volume slowed the rally down this afternoon but a weak dollar and a healthy showing by commodity stocks helped the market close with most of its early gains intact. the dow industrial average ended up
>> susie: as paul mentioned good housing numbers cheered wall street today. sales of existing homes were up 10% in october. but is the stock market reading the housing market correctly? the answer depends in part, on a factor called the "shadow inventory". darren gersh explains. >> reporter: in this economy, most any business would be happy with a 10% jump in sales. this is a burst. >> reporter: but economist dean baker says the housing market remains weak. he argues the first-time homebuyer tax credit has distorted sales. >> what was going on here is we borrowed a lot of sales from the future, so people rushed ahead to buy before the tax credit ended and then once you came within sight of that ending, in october and certainly this month, sales have just fallen through the floor. >> reporter: officially, the data on home sales show improvement -- prices appear to be stabilizing and inventory is officially at 7 months, down from double digit highs last spring.
but baker says that ignores what's called the shadow inventory. that's roughly one million homes that aren't counted for sale because they are in some stage of foreclosure. >> and this is in the context of a market that is supporting maybe five million homes a year, so it is very big relative to the demand in the market. >> reporter: with so many homes still not on the market, baker thinks prices will fall another 10%. but lawrence yun is more optimistic. he's chief economist for the national association of realtors. he says the figures show banks are selling foreclosed homes into a market that increasingly wants them. >> month after month, we see continually steady trimming of the inventory, which would suggest that even with shadow inventory appearing, that there is enough buyers to quickly absorb the inventory. >> reporter: still, there are so many homes out there, yun expects prices to remains soft next year. and he doesn't expect double digit price appreciation to be seen again for another generation. >> i think in light of the fact
that we went through a bm and bust, there will be more caution among consumers. >> reporter: the shadow inventory isn't the only drag on this market. analysts say there are also many homeowners who want to sell, but have been waiting for prices to recover. darren gersh, "nightly business report", washington. >> paul: a different kind of fallout from the housing boom. the consumer product safety commission today said there's a link between imported chinese drywall and corrosion found in newer homes. the drywall in question came from china at the height of the building boom between 2005 and 2007. it went into an estimated 60,000 homes in 32 states. the question now is who will pay to replace it. the safety commission is asking the irs to let homeowners deduct drywall-related costs as a casualty loss on their federal taxes. no decision on that yet from the tax man.
>> susie: if you don't want to sign a 2-year contract for internet service for your laptop computer at&t has a better idea. the telecom is rolling out service that lets consumers surf its network, buying access for a day, a week, or a month. there is a catch, though. the plans offer smaller data downloads than you'd get if you signed a long-term agreement. at&t and its rivals are pushing wireless laptop connections to take advantage of the growing market for those small net-book computers. but paul, the average price tag for a month of contract service is $60 and analysts say that's too high. >> paul: at&t's plan runs about $15 a day without that contract,
and those are the stocks in the news tonight susie. >> susie: paul, these days, finding a good job isn't easy. but one way to improve the odds is to train for an up-and-coming field. this week, we're looking at "careers for the next decade." our first pick is "asian business development specialist". asia is an important market and production center for u.s. firms. and as suzanne pratt reports that's opening up new opportunities for americans in the region. >> reporter: meet dan rosen. he is in beijing on one of his frequent trips to china. on this visit, he is a panelist at a conference on china's
energy supply. >> china today does not have a consumer energy problem, it has an industrial one. >> reporter: as an asian market expert based in new york, rosen advises a range of companies. and, he says there's a growing need for his expertise. >> every business needs to know what competitive forces are changing it's bottom line. ten years ago china was essentially insignificant. for the most part it was something that might happen tomorrow. tomorrow has arrived. and, every industry everywhere on the planet is being profoundly affected by the what's happening in the chinese economy. >> reporter: in the past decade, companies in almost every industry have hired rosen for advice on doing business in china or on how china might affect operations in a firm's own backyard. rosen says his recommendations used to be mostly on business strategies. today, firms increasingly want to know how to reach chinese consumers.
companies are interested in what sectors are best to invest in, how to cope with chinese regulations and what pace of investment makes sense. many also want his outlook for chinese labor costs, forecasts for china's gdp and dollar-yuan exchange rates. there are many types of china business specialists. some are big-picture guys like rosen. but others specialize in particular industries such as finance or textiles. tom monaco handles international career placement at columbia university's business school. he expects more students to focus on jobs dealing with the asian marketplace. >> i think they realize there is a lot of growth potential in china. so, i do think that increasingly students are looking at that and taking that and considering it as a viable option for some long-term career growth. >> reporter: rosen majored in asian studies and economics in college. he also learned mandarin and earned a graduate degree in foreign service. 20 years ago, when he was
looking for an international career, he had no idea where it would lead him. >> i had no doubt china would be an extraordinary story. i didn't know it would be such a market economic dynamo as it's turned out to be. >> reporter: people looking to do asian business analysis, could be employed by corporations, consultancies, non profits or governments. in addition to his work as a consultant, rosen also serves as an economist with a washington think-tank and as a professor he teaches a graduate seminar on china's new marketplace at columbia university's school of international and public affairs. >> we have china in red here. germany right next to it. how many people realize germany was the biggest exporter on planet earth. >> reporter: students many of his students are hoping one day to do what rosen does. which he says has been a dream career. >> absolutely exceeded my expectations. i consider myself one of the luckiest people in the world. i don't know very many people who have as interesting a job as i do. >> reporter: suzanne pratt, "nightly business report", new york.
>> paul: tomorrow, helping patients navigate the health care system. the job of patient advocate as "careers for the next decade" continues. >> susie: a grim outlook for us auto sales: a slight recovery next year. that's the new forecast from an analyst at fitch ratings who's expecting about 11 million cars and trucks will be sold in 2010. that's about 8% more than this year. the report also says even if sales pass that 11 million mark automakers and parts suppliers will still spend more cash than they bring in. >> paul: general motors is looking for help from european governments now that it's keeping the opel brand. today, the automaker met with representatives from britain, spain, poland, belgium, sweden and germany. the countries agreed to talk next month about that aid after gm outlines plans for its european division. earlier this month g.m. decided to restructure rather than sell opel.
>> susie: tonight's commentator says there are lessons to be learned from qatar's education city. she's nada eissa, associate professor of public policy and economics at georgetown university. >> as is usual for me each fall semester, i teach economics to georgetown university students. except, this time it's not in washington d.c., but at our campus in doha, qatar; a tiny peninsula off the coast of saudi arabia. i hadn't thought of my visit as much more than an adventure, but my three months there got me thinking and a bit worried. and not for reasons you might expect. qatar's education city is home to several major u.s. universities cornell, carnegie mellon and about 1,500 students; and it is truly a fantastic experiment. the massive investment in higher education we see in qatar is in fact taking place worldwide. we see that in the 140 million students in higher education institutions today, four times as many as in 1970.
and, china now has more higher education enrollments than we do. what does this all of this mean for the united states? for sure, we benefit from a more and better educated population overseas. but we also face some risks. because as everybody else invests in higher education, the united states will no longer be the obvious choice for the worlds talent; both students and faculty. i've seen this happen in our own searches for young faculty, lured away by attractive offers from foreign universities. the competition is not exactly fierce today, but if we continue to lose talent, how can we maintain the best universities for your kids and mine? and how can we maintain our edge in innovation and economic competitiveness? let's start by recognizing that the world is different. i'm nada eissa. >> paul: recapping today's market action strong housing data help push stocks higher. the dow gained 132 points and the nasdaq added almost 30 points. to learn more about the stories in tonight's broadcast and to
read econo-blogger terri cullen's take on the impact of plunging state revenues go to "nightly business report" on pbs.org. you can also email us at email@example.com. >> susie: americans will sit down to thanksgiving dinner on thursday. but this year many will get their meals from food pantries and soup kitchens. currently one in seven americans is struggling to get enough to eat. as diane eastabrook reports food banks are struggling to feed everyone who needs help in this tough economy. >> so, what we're doing here is station five. do we have enough people here for station five? >> reporter: like a general, kate roche is preparing for an invasion. roche and 50 volunteers at chicago's irving park community food pantry are furiously bagging food. are you ready? and bracing themselves for the invasion of hungry clients picking up thanksgiving food baskets. oh, you know me, thank you. recipients will haul 500 baskets out the door this year, about
150 more than last. this pantry has been around about 25 years and it typically sees senior citizens and the chronically unemployed. but, about a year ago it began seeing a new kind of client: the first time unemployed worker. tim burris is one of them. he's been jobless for two years and comes to the pantry each week. i've been looking. i've been filling out applications, but nobody's been calling me because the of the way the economy is right now it's hard for anybody to find jobs. rising unemployment is sending more americans like burris to food pantries for help. feeding america--which represents hundreds of food banks and pantries nationwide-- says demand is up more than 20% this year over last. chicago pantries get most of their food from the greater chicago food depository and it's feeling the pantries pain. >> it's harder today to get food than probably any point in our history. >> reporter: executive director kate maehr walks me through the
massive food warehouse that distributes about 60 million pounds of canned goods, produce, and meat a year. the depository gets some things like orange juice from the government, but it mostly counts on food companies to give it mislabeled or excess food. maehr says the tough economy is forcing those firms to better control inventories and assembly line mistakes. so, that means fewer donations. how do you make that up? are you getting it through donations, other people donating? well increasingly we're having to make it up by purchasing food. so, in the case of this food bank we'll purchase about $6 million worth of food this year. ten years ago we weren't purchasing food at all. >> reporter: the irving park community food pantry has been turning more to its neighbors, who frequently pull up to its doors and unload food. still, executive director john psiharis worries at some point the pantry will run dry. >> we' re very grateful for the outpouring of support that we've had, but obviously the need is great. >> reporter: the pantry is also grateful that it could provide thanksgiving dinner this year to everyone who asked for it.
diane eastabrook "nightly business report" chicago. >> that same story is going on in miami where you are and in new york where i am and a lot of cities right in between. >> these are good people. >> yes, they are. that's a good point. that's that's nightly business report for monday, november 23. i'm susie gharib. goodnight everyone. and good night to you paul. >> paul: goodnight susie. i'm paul kangas wishing all of you the best of good buys. "nightly business report" is made possible by: 150 years of financial strength and the experience of an established investment firm have come together. wachovia securities is now wells fargo advisors, with financial advisors nearby and nationwide.